Commissioner of Income-tax Vs. Anchor Pressing Pvt. Ltd - Court Judgment

Excerpt:
direct taxation - assessment - sections 145 and 256 of income tax act, 1961 - tribunal is finding regarding account statement of assessed based on facts - no question of law arises for adjudication. - - 2,50,000 which was deleted by the appellate assistant commissioner as well as by the tribunal. the appellate assistant commissioner proceeded to discuss the various defects pointed out by the income-tax officer and a perusal of his order clearly shows that he discounted the criticisms made by the income-tax officer except in regard to certain discrepancies between the goods shown as 'issued and sold' and the stock of goods shown as 'produced',the former on some dates being in excess of the latter. 2,50,000 primarily for two reasons :one, on the basis of the quantity of scrap sold as deduced from the value of the scrap sold and the second, by the reason of certain discrepancies regarding the consumption of sodium cyanide in the month of september, 1970. when the matter came to the tribunal, the tribunal first examined the books of account of the assessed and the method of account-keeping and came to the conclusion clearly expressed in paragraph 10 of its order that the proviso to section 145(1) or section 145(2) of the act could not be made applicable to the case of the assessed and that the production data had been properly maintained by the assessed.s. ranganathan, j.1. these applications under section 256(2) of the income-tax act, 1961, can be disposed of by a consolidated order as they arise out of the assessments of the same assessed in somewhat similar circumstances. 2. itcs nos. 225 and 226 of 1982 arise out of cross-appeals preferred by the assessed and the department in relation to the assessment of m/s. anchor pressing pvt. ltd. for the assessment year 1971-72. itcs nos. 223 and 224 of 1982 arise out of the, cross-appeals by the assessed and the department in relation to the assessment for the assessment year 1972-73. itc no. 19 of 1983 pertains to the assessment year 1974-75. 3. for the assessment year 1971-72, the income-tax officer rejected the books of account of the assessed and made an addition of rs. 18,26,000 to the profits disclosed by the assessed and this figure was subsequently rectified to rs. 14,00,000 by the income-tax officer himself. the appellate assistant commissioner reduced the addition to rs. 2,50,000. both the assessed and the department appealed to the income-tax appellate tribunal which dismissed the department's appeal and partly allowed the assessed's appeal restricting the addition only to rs. 15,000. for the assessment year 1972-73, the addition of rs. 5,32,277 made by the income-tax officer was reduced by the appellate assistant commissioner to rs. 32,277. even this addition was deleted by the tribunal which directed the acceptance of the book results and dismissed, the department's appeal and allowed the assessed's appeal. in the assessment year 1974-75, the income-tax officer made an addition of rs. 2,50,000 which was deleted by the appellate assistant commissioner as well as by the tribunal. the grievance of the department in these reference applications filed at the instance of the commissioner of income-tax is that the appellate tribunal was in error in reducing the addition to rs. 15,000 in the assessment year 1971-72 and in deleting the additions made in the subsequent two years. 4. the above narration itself will be sufficient to indicate that the question sought to be raised by the department is primarily a question of fact, whether the book results of an assessed ought to be accepted or not and to what extent an addition had to be made or sustained are purely conclusions of fact depending on the facts and circumstances of the case. however, since the additions made were quite substantial and the department's grievance is that the book results should not have been accepted and the additions should have been maintained, we shall briefly indicate the ground of the grievance made by the department before us. 5. the department's grievance is mainly based on the consolidated order of the tribunal on the appeals preferred both by the assessed and the department in relation to the assessment year 1971-72. learned counsel for the department invites our attention to the following passage in the order of the tribunal which, according to him, contains the substance of the tribunal's finding : 'we, however, are of the opinion that the other major defects in the assessed's books of account, namely, discrepancies relating to sale of goods not available in the dispatch department remained unexplained. we have already mentioned above the various explanationns offered by the counsel for the assessed before us. some of these have been taken up for the first time before us while some were taken before the lower authorities also. however, they are of general nature and do suggest that the declared profit should not be accepted and some addition is called for. we have also noticed that some discrepancies were found in the earlier year also and the tribunal had sustained an addition of rs. 16,400. taking the word of dr. vaish at the bar that such discrepancies would not be of the value of more than rs. 15,000, we hold that it will be reasonable to retain the addition to that extent only.' 6. counsel for the department argues from this passage that the tribunal has given a finding that there are major defects in the books of account and that their estimate is purely based upon a statement made by the assessed's representative at the bar. he submits that this is not a proper legal approach and that, thereforee, a question of law arises out of the tribunal's order. 7. as we have mentioned earlier, the above passage occurs only in the order of the tribunal in the assessment year 1971-72. we may at once mention that for the other two years 1972-73 and 1974-75, there is no such observation. the tribunal has given a clear finding in those years that the books of account of the assessed were completely acceptable and that there were no discrepancies at all. it is, thereforee, clear that any question sought to be raised and, if at all, can be only a question of law so far as the assessment year 1971-72 is concerned but not for the other two years. hence, the applications pertaining to the assessment years 1972-73 and 1974-75 deserve to be and are dismissed. 8. but, even so far as the assessment year 1971-72 is concerned, we find that the passage relied upon by the learned counsel for the department and the argument sought to be made out of it are not justified, as they ignore the context and the background in which these observations have been made. for the assessment year 1971-72, the income-tax officer had listed certain specific defects and discrepancies which are neatly summarised by the appellate assistant commissioner in paragraph 2 of his order. the appellate assistant commissioner proceeded to discuss the various defects pointed out by the income-tax officer and a perusal of his order clearly shows that he discounted the criticisms made by the income-tax officer except in regard to certain discrepancies between the goods shown as 'issued and sold' and the stock of goods shown as 'produced', the former on some dates being in excess of the latter. he sustained an addition of rs. 2,50,000 primarily for two reasons : one, on the basis of the quantity of scrap sold as deduced from the value of the scrap sold and the second, by the reason of certain discrepancies regarding the consumption of sodium cyanide in the month of september, 1970. when the matter came to the tribunal, the tribunal first examined the books of account of the assessed and the method of account-keeping and came to the conclusion clearly expressed in paragraph 10 of its order that the proviso to section 145(1) or section 145(2) of the act could not be made applicable to the case of the assessed and that the production data had been properly maintained by the assessed. the tribunal also found against any discrepancy. in the sodium cyanide account. the only point on which the tribunal entertained some doubt was regarding the extent of scrap that had been accounted for by the assessed. the income-tax officer had worked out the quantity of scrap accounted for by the assessed at 95,401 kgs. and, on that basis, came to the conclusion that 1,29,835 kgs. of raw materials and components purchased had not been accounted for by way of production, components sold or scrap sold. it was the value of this that was estimated by him at rs. 14,00,000. the appellate assistant commissioner calculated the shortage at 77,516 kgs. and sustained the addition of rs. 2,12,000 on this account. before the tribunal the case of the assessed was that the weight of the scrap accounted for by the assessed had not been properly calculated and it was explained that if properly calculated, it would be seen that there was no discrepancy at all. the tribunal observed that the nature of the defect in this regard was are was also not very serious since it depended entirely on estimate. they observed that it will not be sufficient to hold that there was any actual suppression of the goods and that such suppression had been either sold or was converted into goods. at the most, what could be said was that the entire scrap had not been accounted for by the assessed but the value of this would be very negligible and it would not be proper to throw out the assessed's books of account on the negligible difference worked out by the appellate assistant commissioner. in other words, the tribunal found that there was no such defect in the method of accounting of the assessed that would justify any addition. 9. the tribunal, however, found that there was a discrepancy between the figure of goods shown as 'sold' and the stock of the goods 'produced' on certain dates and, though some explanationn was offered in regard to this, the tribunal did not accept this explanationn. an addition had to be made for this specific defect and the question related to the quantum of addition that had to be made on this account. in this context, it is necessary to mention that an exactly similar question had arisen in regard to the assessment year 1970-71 and in the order of the tribunal which is the subject-matter of the present application, the tribunal had extensively referred to the order made for the previous year. in particular, in paragraph 10 of the order for the earlier year, the tribunal had discussed this matter, pointed out that the discrepancies in regard to these were specific discrepancies and that there was no material brought on record to show that they were illustrative in character, but came to the conclusion that the addition had to be confined to the actual discrepancies found by the income-tax officer. in that year, i.e., 1970-71, the figure was rs. 16,400 and this was the addition that was sustained by the tribunal in that year.it is in this context that the reference to the statement of counsel at the bar in the order for this year has to understood. the position being the same, the conclusion of the tribunal was that for this year also, the addition had to be restricted to the extent of specific discrepancies found between the quantities produced and the quantities sold. in the earlier year, the figure of such discrepancies was rs. 16,400 and the tribunal ascertained from the counsel for the assessed that for the year presently under consideration, the quantum of such discrepancies would come to rs. 15,000. in other words, the tribunal has not merely sustained the figure of addition which was suggested by the counsel for the assessed; it has sustained a figure of addition based on the quantum of specific discrepancies pointed out by the income-tax officer and it was the figure of such discrepancies that they collected from the counsel for the assessed. it is not the case of the department that this figure is wrong and that the income-tax officer had pointed out the discrepancies to a larger extent than this. in other words, if one reads the order of the tribunal for the assessment year 1971-72 in the light of the order passed for the assessment year 1970-71 where as similar addition was considered in similar circumstances, it becomes amply clear that the addition sustained by the tribunal was based on specific facts and discrepancies and was not a figure adopting the ipse dixit of the counsel who appeared for the assessed. 10. for the reasons discussed above, we are of the opinion that the order of the tribunal was based entirely on the facts and circumstances of the case and the addition had also been sustained with reference to the specific figures available from the books. the conclusion of the tribunal does not, in our opinion, give rise to any question of law even for the assessment year 1971-72. 11. for the above reasons, we are of the opinion that all the five itcs should stand dismissed and we direct accordingly. however, in the circumstances of the case, we make no order as to costs.